Nothing better reflects the sweet financial marriage between China and the West than this model: venture capitalists from the West Coast of the United States provide funding to the brightest entrepreneurs in China, helping them reach hundreds of millions of Chinese consumers in a short time span via internet technologies. Then Wall Street banks arrive to help them walk through the legal and regulatory labyrinth before an eventual public offering on the New York Stock Exchange or the Nasdaq. Hundreds of billions of dollars flowed across the Pacific over the last two decades. For every week in the first half of 2021, there’s one Chinese technology company making an initial public offering in the US. They raised US$12 billion in total, or about four times as much as in the first half of 2020. It’s an impressive figure, given the fact that most travel has halted between China and the US. It is also an extraordinary amount given the geopolitical tensions between Beijing and Washington. But the gigantic money-printing machine across the Pacific keeps humming, enriching the founders, the risk-taking early investors and the powerful who can set foot in the room – not to mention the bankers, lawyers, accountants and the general investors who are wise or lucky enough to pick the right stock. US-China tech war: In the battle for talent, the US is ‘shooting ourselves in the foot’ It has also benefited a great majority of consumers in China who are now able to access unprecedented convenience and efficiency from internet-based services, as well as a booming Chinese technology sector that has provided jobs, and hopes, for millions of Chinese talents in the last two decades. However, there are signs of a potential wrench in the system. In the US, investor scrutiny over Chinese tech stocks is on the rise following scandals and hostilities. Washington has started to roll out a law that may eventually delist Chinese stocks if they cannot submit their audit papers for US review. In China, the market is quickly maturing as internet services penetrate deep into society. It’s hard to find an adult Chinese consumer without a cellphone these days, and each is usually replete with competing apps covering a range of offerings, from e-commerce to short videos. More importantly, it’s getting harder to tell a good China business story by just using terms that US investors can easily understand – i.e. user base, market share, revenues and earnings. As Beijing becomes increasingly impatient with the profit-centric focus of the country’s tech giants at the expense of the public’s best interests, oversight officials are changing the game’s rules by adjusting laws and the regulatory structure. The changes could disrupt or even overthrow proven business models. For instance, a start-up can no longer thrive in China simply by gathering massive amounts of user data and then applying smart algorithms to turn the users into potential consumers, because the cost of acquiring and managing data is set to rise steeply. To understand where the real value lies, investors in China’s tech stocks may need to spend as much time studying the latest policies and practices out of Beijing – known as Pekingology – as they do reading corporate financial statements.